The clothes that Tommy Roberts sold under the label Mr Freedom were the radical origins of streetwear, but his true talent was as an impresario in the theatre of retail. By the mid-1960s he grasped that shopping had become entertainment – venue and ambience mattered as much as the goods. His own emporia faded or failed, but Roberts, who has died aged 70, never lost faith in his medium, and in retirement painted scenes of Kings Road boutiques in the 60s. "I don't want to run a shop," he said. "I want to run a circus."

The clothes business ran in his family; his father owned a tie company. Tommy had an art school education at Goldsmiths, University of London, and managed coffee bars and sold American cars. He loved the "populuxe" styling of espresso machines, limousines and blue suede shoes. He put together his own style from old clothes – not yet dignified as "vintage" – and theatrical costume, and carried that over to his first boutique, Kleptomania, which he opened in 1966, in Kingly Street, Soho, around the corner from Carnaby Street, where John Stephen was running several shops.

Roberts, a buyer of junk around his native south London, knew where to pick up a Life Guards tunic or a kaftan, even a penny-farthing bicycle, with which to stock his place. Youngsters dived into Stephen's outlets for the latest gear, while the makers of music for those youngsters – Jimi Hendrix, Roger Daltrey of the Who – made rarer purchases to the twangle of sitars in Kleptomania, next door to the rock drinking hole the Bag O'Nails.

In 1969, with his business partner Trevor Myles, Roberts moved to 430 Kings Road, Chelsea, a shop he called Mr Freedom after a film directed by William Klein. Fashion was dividing by genre (ethnic-hippy, gnomish whimsy), and Roberts, with his visual acuity and happy vulgarity, went for pop art: strong graphics, primary colours, comic-book iconography.

The goods he chose were produced in tiny quantities and sold in one small shop, but models including Twiggy and Jean Shrimpton bought them, as did Mick Jagger (another art school product) and – before their own fashion careers – Malcolm McLaren and Vivienne Westwood.

Mr Freedom moved in 1970 to occupy four floors in Kensington Church Street with enough space for "fun furniture" – nursery stuff for adults, never seen before – and, in the basement, a mini burger bar, Mr Feed 'Em, with a plastic fly in every bowl of soup. He commissioned T-shirts and accessories printed and appliquéd with cartoon characters and with slogans, also a novelty. He gave shelf space to young makers with playful ideas, such as Jim O'Connor's winged boots, as worn by Elton John. Paul Gorman, Roberts's biographer, wrote that the dowdy John "went to Mr Freedom and emerged as the Liberace of the 70s".

Around 1971, Roberts was a powerful design sensibility, admired in Paris (Yves Saint Laurent attempted the graphic appliqués); exhibited in the Victoria & Albert Museum; influential in Japan (Mr Freedom remains a foundation style of Harajuku youth culture) and with a proto-Top Shop concession in the Peter Robinson fashion store in Oxford Street.

Dresses from Mr Freedom being modelled in Kings Road, Chelsea, in 1973. Photograph: John Minihan/Getty Images

Roberts went out of business and then immediately back into it with the City Lights Studio in 1972, an atelier above a former banana store in a Covent Garden not yet rebuilt for retail (his protege Paul Smith waited seven years to follow him there). His star customer was David Bowie. The shop's look was glam rock darkening to goth, silver dust varnished into the old wood floors; its income was boosted by Bowie fans who bought their hero's choices to wear at his gigs. The recession bankrupted Roberts in 1974 and he retreated to antique dealing, although he kept up with the music business, managing and outfitting Ian Dury's band Kilburn and the High Roads and offering free rehearsal space to the Sex Pistols.

The location of his 1981 shop, Practical Styling, was the base of the loathed Centrepoint block, which had been shunned by tenants. For five years he curated an inventory of furniture-as-art and playthings, none as much fun as Mr Freedom's liquorice allsorts poufs. He lapsed into a quiet personal dealership in modern furniture, but was tempted back into retail twice more: in 1993 with TomTom, in Soho, selling 20th-century furniture and Japanese toys, and in 2001, with Two Columbia Road in Shoreditch, E2 (an edgy postcode then), a joint venture with his son Keith, promoting Scandinavian furniture. Roberts retired three years ago to his Dinky toys, his books and painting.

He is survived by his second wife, Jane Sharratt, and their son, and by two sons of his first marriage, to Mary Brookes, which ended in divorce.

• Tommy Roberts, retailer, born 6 February 1942; died 10 December 2012